Price measurement
Sources:
Discussion on Price Measurement
Measuring Price Changes
and discuss the challenges in measuring price changes over time, especially when product models change. They highlight that maintaining the same price while the product quality improves, as with modern TVs, essentially means the consumer is getting more value for less money. This requires quality adjustments in price indices. Additionally, when manufacturers switch to cheaper inputs (e.g., from domestic to foreign suppliers), it can lead to mismeasurement issues in economic statistics 1 .
Rethinking Economic Measurement
and explore public skepticism about traditional economic measures like GDP. Coyle suggests that we need better metrics that account for natural and human capital, as well as social impacts, which became particularly evident during the pandemic. They also address the difficulties of adjusting prices during economic crises and the resistance against price adjustments due to social pressures 2 .
Understanding Inflation Measurement
and delve into the intricacies of measuring inflation. They emphasize the need for continuous price level measurement and note the issues of aggregation. Inflation isn't just a one-time price hike but a sustained increase that typically involves expanding the money supply. Measuring inflation accurately involves sampling a variety of goods over time, making it a complex statistical challenge 3 .
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